Fuhrmeister Appraisal has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Go to list of questions) The procedure of performing an appraisal deals with an inspection which forms an opinion of value. There are three "common approaches to value" which helps the appraiser conclude this opinion or estimate. One of the methods in use is the Cost Approach, which is what it would cost to replace the improvements to the house, less the age and physical dilapidation, plus the land value. The most common approach in figuring the value of a home is the Sales Comparison Approach which deals with concluding a comparison to similar properties close by. The Sales Comparison Approach is commonly the most accurate and best indicator of value for a home. One of the least common approaches in appraising houses is the Income Approach, which is generally used to find the market value of a property based on what an investor would pay based on the capital produced by the building.
What does an appraiser do?(Go to list of questions) An appraiser produces an unprejudiced and well supported assessment of market value, to be used in making real estate transactions. Appraisers summarize their professional investigation in appraisal reports.
Why would a person require a real estate appraisal?(Go to list of questions) There are a lot of reasons to get an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for ordering an report include:
What is the difference between an appraisal and a home inspection? (Go to list of questions)Home inspectors do not come to an opinion of value and do not use the same forms as appraisers. A third-party home inspector will investigate the structure of the property, from the top to the foundation. For the most part, a home inspection report will explain the amenities and the necessities of the house: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.
What is the difference between an appraisal and a comparative market analysis (CMA)?(Go to list of questions) Frankly, it's like comparing Shakespeare to reality TV. The CMA relies on vague trends in the market. The appraisal is based on similar proven comparable sales. The appraisal report will also include location and construction values. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
But the most significant factor is who's creating the report. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Moreover, the appraiser is an unbiased party, with no vested interest in the value conclusion, unlike the real estate agent, who gets a commission based upon the price of the home.
What does the appraisal report contain? (Go to list of questions)The main objective of an appraisal document is to let the reader know the value of the real estate in question, and depending on the scope of the report, you'll usually see the following:
Upon completion of the report, what guarantee is there that the value conclusion is valid?(Go to list of questions) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who are an appraiser's customers?(Go to list of questions) Mortgage lenders are an appraiser's most likely customer, needing their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does Fuhrmeister Appraisal get the information used to estimate values in Johnson County or other areas?(Go to list of questions) One of the primary tasks an appraiser engages in is to collect data. Data can be split into Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.
General data is gathered from a number of sources. Local Multiple Listing Services (MLS) provide information on recently sold homes that could be used as comparables. Tax records and other public documents reveal actual sales prices in a market. Appraisers routinely have to report when a property lies in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.
And most importantly, the appraiser assimilates general data from his or her past experience in creating appraisals for other properties in the same market.
Why should I hire a licensed appraiser?(Go to list of questions) Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. For those selling a home, you'll want to figure out a price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Fuhrmeister Appraisal is the best way to ensure assets are split up properly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value means you can make wise financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Go to list of questions) PMI is the common abbreviation for for Private Mortgage Insurance. PMI covers the lender if a borrower doesn't pay on the loan and the value of the house is less than the loan balance. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.
Should I do anything in advance of the appraisal inspection(Go to list of questions) We start with an inspection of the property. During this process, we will come to your home and measure it, determine the layout of the rooms inside, confirm all aspects of the home's general condition, and take several photos of your house for inclusion in the report. On the home's interior, make sure it is clutter free and that we can find our way to things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of exterior walls.
To help expedite our work as well as ensure a more accurate report, try if possible to have the following items:
What is "Market Value?"(Go to list of questions) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Does the appraisal belong to the bank or the consumer?(Go to list of questions) In most real estate transactions, the appraisal is ordered by the lender. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is certainly entitled to a copy of the appraisal - it's usually included with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.
It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these situations, the appraiser may stipulate how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.
Which home renovations add the most to the price?(Go to list of questions) A home's location - what city it is in and even what part of that city - is key to this popular question. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes
No matter where you go, however, renovating a kitchen is almost always a safe investment. According to one national survey, kitchen remodels returned an average of 88% of the investment. In other words, a $10,000 kitchen remodeling project would add approximately $8,800 to the value of the home. Bathrooms are right up there with kitchens, returning 85%. Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become atypical for your neighborhood in terms of size.